Economic consequences of the Russia-Ukraine war: a brief overview

Abstract

At the end of February 2022, Russian President Putin announced the beginning of a military intervention in Ukraine. The Russian invasion of Ukraine is dramatic and its economic consequences are very serious. This article reviews some of the early economic consequences this conflict is having. The shock is affecting the financial markets with falls in the stock markets, on the one hand, and producing rises in the price of raw materials, on the other. Russia is the European Union's most important supplier of some crucial imports, which cannot be replaced quickly or at all, such as natural gas. Russia is prepared to deal with the sanctions in the short term, but in the long term it could take a heavy toll and become economically isolated. This conflict also highlights the importance for countries in the future to diversify their sources of supply and not rely heavily on a single source.